Corning Incorporated: Always Bright Ideas
Shining a light on why you need to know about Corning!
Corning Incorporated (Corning) is a leader in the materials science industry. As a firm with a market capitalization of $21 billion[1] and operations in over 100 countries[2], it represents a highly effective firm whose competitive advantage lies in it’s ability to both sell products and manage innovation in a way that produces substantial value.
Sources: Star Gazette[3] and Corning Inc.[4]
Business Model
At the heart of it, Corning sells glass. For over 150 years[5], the firm has turned operational processes into business value by developing ever-more applications for glass-related products. The firm now manages product lines across five areas: display technologies, environmental technologies, optical communications, life sciences, and specialty materials[6]. Everyday day, millions of people interact with Corning products[7], whether it is touching Gorilla Glass® on their iPhones or streaming video online using data fed through Corning fiber optic cables. Simply put, Corning makes money by figuring out new uses for glass and then selling those products to the market. As represented in the Corning marketing video, “A Day Made of Glass”[8], Corning is betting its future revenue growth on making interaction with glass-type materials an even bigger part of our daily life.
The fascinating thing about the video is that it makes it seem very plausible that one day the majority of our electronic interactions will take place through an optical medium. Furthermore, Corning’s model of continual product line extension represents an effective approach because it creates a large diversity of revenue streams from which the firm can capture value.
Operating Model
Effective operating models create value by judiciously managing elements like firm governance, people, processes, and technology capabilities[9]. Corning achieves success in this area by closely managing technology, process, and talent efforts in a manner consistent with its long term revenue goals.
Key operational efforts driving growth:
- Technology Management
Corning achieves gains in technology capabilities by re-investing a sizable portion of annual revenues right back into R&D. Devoting large operational management efforts towards R&D has enabled Corning to establish “intellectual property as one of its most highly valued assets”[10] ensuring industry growth benefits the firm.
- Process Management
A significant element ensuring Corning’s operational efforts lead to business value is Corning’s Growth and Strategy Council (GSC). The GSC is comprised of its Chief Executive, Operations, and Technology officers[11] and is chartered with “maintaining a balanced and robust innovation portfolio through pacing investments in individual programs and making resource allocations between Corning’s existing and developing businesses”[12]. By taking steps to centralize management of the innovation process, the firm has positioned itself to make better decisions around resource management and ensure that innovation efforts are a complementary fit with the firm’s business goals.
- Talent Management
Corning has been on a hiring binge for the last several years[13]. It recognizes that investments in talent are of the utmost necessity and the only way the firm will be able to ensure that operational gains translate to revenue.
“In less than three years, we needed to hire 3,000 employees, almost 1,000 engineers, and bring two facilities online in Taiwan…..The main risk to operational success and capitalizing on this opportunity was talent and hiring.” – Christy Pambianchi, senior vice president of Human Resources.
Understanding the need to attract the best technical talent, Corning recently announced[14] it had established a sabbatical program at its Sullivan Park Research and Development facility designed to attract leading glass researchers in academia to collaborate on R&D programs.
Summary
It is clear that Corning is not sitting idly by. The firm knows its competitive advantage could be fleeting if it strays away from its core competency of turning innovation into dollars. By continual efforts spent refining internal processes, it maintains the tight linkage between operating and business models required to succeed in today’s marketplace. As “A Day Made of Glass” shows, Corning looks to be around for a very long time and stands ready to invest time and resources on efforts leading to long term success.
Sources (Accessed between Nov 26 and Dec 6, 2015)
- Corning Financials: http://finance.yahoo.com/q?s=GLW
- Corning worldwide operations: http://investor.shareholder.com/corning/secfiling.cfm?filingID=24741-15-15&CIK=24741
- Star Gazette: http://www.stargazette.com/story/news/2015/09/22/corning-inc-celebrates-optical-fiber-milestone/72626892/
- Corning Inc. Website: https://www.corning.com/worldwide/en.html
- Corning history: http://investor.shareholder.com/corning/annuals-proxies.cfm
- Corning business segments: https://www.corning.com/worldwide/en/about-us/corning-business-segments.html
- iPhone usage statistics: http://www.fool.com/investing/general/2015/07/28/how-big-is-apples-us-iphone-user-base.aspx
- “A Day Made of Glass” video: https://www.youtube.com/watch?v=6Cf7IL_eZ38
- Operating model description: http://www.bain.com/publications/articles/winning-operating-models-that-convert-strategy-to-results.aspx
- Corning intellectual property: http://seekingalpha.com/article/3045646-corning-see-the-opportunity-through-the-glass?page=2
- Corning Growth and Strategy Council background: https://mitsloan.mit.edu/LearningEdge/CaseDocs/08-056.Corning.GSC.Henderson.pdf
- Corning Growth and Strategy Council background: https://mitsloan.mit.edu/LearningEdge/CaseDocs/08-056.Corning.GSC.Henderson.pdf
- Corning hiring info: https://www.corning.com/worldwide/en/careers/our-people/talent-and-hiring-spur-cornings-reinvention.html
- Corning.com announcement: https://www.corning.com/worldwide/en/innovation/culture-of-innovation.html
Notes:
- Referenced for additional insight : https://hbr.org/2015/01/what-is-a-business-model
- Blog post featured image: https://www.corning.com/worldwide/en.html
- Sources not cited above are noted in main body of post.
Great work Rex. I really enjoyed reading your post.
The video seemed like something straight out of Tony Stark’s lab!!!!! You’ve made me a fan of Corning but one of the few weaknesses I see is product diffusion. It seems like Corning has a number of really good innovations on the horizon but I just wonder how quickly some of these innovations would be adopted in the market. While most of their future innovations seem really cool, in the back of my mind I kept asking myself (1) how expensive will this be when it finally comes to market and (2) how long will it be before people really catch on and the product becomes mainstream. For example, the 3D TV Corning showed looked awesome, but regular 3D TVs have been around for years now and they still haven’t even caught on yet.
-LL Cool Chea
LL Cool Chea – thanks for taking a look! You bring up some really interesting points. From my experience, a lot of what Corning does is create ideas that they know will have to sit on the shelf for a number of years, so there are definitely issues around the delay between creating and monetizing a product. If that approach is taken too often, you are right that it could pose a risk to the business model. Regarding the problem of cost to consumer, I don’t believe there needs to be too much concern about this. Corning has already established itself as a leader in scale by being able to answer the calls of Samsung and Apple to deliver high-quality glass screens to their mobile phone production process. That is, in my opinion the firm is well positioned to leverage its deep bench of manufacturing scale and talent to deliver to market products that are not priced unnecessarily high because of the variable cost to produce. It has also proven that it can easily partner with other firms without adding too much inefficiency to the mix, so from the perspective of integrating it’s products into other applications (like a fridge, countertop, etc.) it is again, from my perspective, ready to deliver products to market without shifting too much cost to the consumer.